GST starts a Sea of Litigation

As we draw close to the ‘GST anniversary’, all stakeholders (tax payers, tax administration) are bound to discuss the ‘hits’ and the ‘misses’. However, the biggest aftermath is the sea of litigation that arose and is expanding with each day.

According to recent Economic Survey, there are nearly 2.3 lakh tax cases already pending in different levels of judiciary. These figures have risen substantially post the GST rollout. The cases pertain to which tax slab their product falls into, anti-profiteering, deemed exports, export refunds so on and so forth.

Recently, the Delhi high court was hearing a petition challenging the levying of 12 per cent GST on sanitary napkins. The court observed if bindi, sindoor and kajal are out of the GST purview, then why not sanitary napkins?

Classification issues are the biggest contributors to legal disputes. The government should regularly issue clear subordinate laws and guidance to remove ambiguity. Clarity on the GST laws and clauses will substantially reduce the litigation.

Also, there is not much clarification from the government on the ‘Anti-Profiteering’ clause under GST. This leaves room for a lot of doubt for businesses. Recently, anti-profiteering notices were issued to MNCs including Mc.Donald’s franchisees, leading retailer Lifestyle, a Honda dealer for not passing on the GST benefits to consumers.

Last but not the least, mismatching of input tax credit is one of the biggest challenges for companies. Assessing wrong tax liability and wrong GST returns further increases the costs for the organization. One source India is one of the best tax automation technology that assists large companies in tackling the GST troubles. The intelligent tax technology simplifies the GST lifecycle through accurate calculation and ensuring 100% tax compliance.

Steps Taken to Combat Rising Litigation

The government officials recently sensitized the high court judges from various states, towards the new indirect tax. The deliberations took place with topics including ‘potential areas of conflict and litigation under GST’ , ‘Comparative analysis of concepts: GST Vs Central Excise, Service Tax and VAT’. All the sections and clauses pertaining to GST were discussed at length. This exercise will definitely be beneficial for tax payers.

What’s the Solution?

Simplifying the GST framework and providing more clarity on the law will be helpful in tackling the litigation menace. It is expected, as the regime keeps changing, it will take a few years before the dust settles down. As is witnessed in all other countries that implemented GST, the first few years see a sharp rise in litigation, followed by a downward sloping curve.

As we draw close to the ‘GST anniversary’, all stakeholders (tax payers, tax administration) are bound to discuss the ‘hits’ and the ‘misses’. However, the biggest aftermath is the sea of litigation that arose and is expanding with each day.

According to recent Economic Survey, there are nearly 2.3 lakh tax cases already pending in different levels of judiciary. These figures have risen substantially post the GST rollout. The cases pertain to which tax slab their product falls into, anti-profiteering, deemed exports, export refunds so on and so forth.

Recently, the Delhi high court was hearing a petition challenging the levying of 12 per cent GST on sanitary napkins. The court observed if bindi, sindoor and kajal are out of the GST purview, then why not sanitary napkins?

Classification issues are the biggest contributors to legal disputes. The government should regularly issue clear subordinate laws and guidance to remove ambiguity. Clarity on the GST laws and clauses will substantially reduce the litigation.

Also, there is not much clarification from the government on the ‘Anti-Profiteering’ clause under GST. This leaves room for a lot of doubt for businesses. Recently, anti-profiteering notices were issued to MNCs including Mc.Donald’s franchisees, leading retailer Lifestyle, a Honda dealer for not passing on the GST benefits to consumers.

Last but not the least, mismatching of input tax credit is one of the biggest challenges for companies. Assessing wrong tax liability and wrong GST returns further increases the costs for the organization. Onesource is one of the best tax automation technology that assists large companies in tackling the GST troubles. The intelligent tax technology simplifies the GST lifecycle through accurate calculation and ensuring 100% tax compliance.

Steps Taken to Combat Rising Litigation

The government officials recently sensitized the high court judges from various states, towards the new indirect tax. The deliberations took place with topics including ‘potential areas of conflict and litigation under GST’ , ‘Comparative analysis of concepts: GST Vs Central Excise, Service Tax and VAT’. All the sections and clauses pertaining to GST were discussed at length. This exercise will definitely be beneficial for tax payers.

What’s the Solution?

Simplifying the GST framework and providing more clarity on the law will be helpful in tackling the litigation menace. It is expected, as the regime keeps changing, it will take a few years before the dust settles down. As is witnessed in all other countries that implemented GST, the first few years see a sharp rise in litigation, followed by a downward sloping curve.